Do performance reviews really perform?

In many companies, the end of the year means end-of-the-year performance reviews. But according to HR staffers, those reviews are neither as fair nor as constructive as they should be.

A story from the Wall Street Journal cites failing grades given to the performance-review process by 750 HR professionals last summer. Conducted by Sibson Consulting Inc. and WorldatWork, the study found that 58 percent of HR personnel rate their own company’s performance review process a “C” or below, and only 30 percent of respondents felt that their employees had a sense of trust in their performance review. Many of those polled criticized managers for failing to provide constructive feedback to employees during their reviews, and said there was neither consistency nor transparency in the performance-review process.

The perceived problems in the process have led to some extremely passionate — or perhaps just plain extreme — reactions. From the WSJ article:

The performance review systems at companies have gotten so bad that companies might be better served by doing away with them altogether, suggests Samuel Culbert, management professor at University of California- Los Angeles and author of “Get Rid of the Performance Review!” “It causes fear and intimidation and prevents people from engaging one another authentically,” he says. Instead, managers should be trained to regularly work with employees to identify ways the manager can help them improve, in a way that doesn’t make the employees afraid to acknowledge weaknesses, he says.

In his book, Culbert outlines his performance-review alternative more specifically:

In this new system, managers will stop labeling people “good guys” and “bad guys”—or, in the sick parlance of performance reviews, outstanding performers, average performers, and poor performers to be put on notice. Instead, they’ll get it straight that their job is to make everyone reporting to them good guys, or own up to the fact that they don’t know how with this guy…Getting rid of the performance review is a big step forward in allowing a boss and the boss’s direct reports to communicate candidly about what’s needed for better results on the job.

The more one reads of Culbert’s book, the more it becomes clear that his central argument has less to do with the performance review process itself and more to do with a call for better communication in the workplace in general, though of course he believes it’s impossible to achieve the latter without getting rid of the former.

Culbert’s efforts aside, it appears performance reviews aren’t going away anytime soon. How can they be better? In outlining 10 steps to effective job reviews, Dun & Bradstreet include something that would likely be right up Culbert’s alley:

Make it a two-way conversation. An effective performance review requires an interactive discussion with an open agenda. Try to formulate questions that seek the employee’s ideas and input. Remember, this will help the employee feel you value his or her opinions. The review should also be a forum for employees to voice their concerns.

From an employee’s perspective, it’s necessary to prepare for both the strengths and weaknesses of performance reviews. This means, according to Doug White of Robert Half International, a lot more preparation than most people generally do for their reviews. He writes that since there’s no way for a supervisor to remember all of his or her employees’ accomplishments over a year, it’s important for the employee to prepare a list. It’s also wise, he says, to think of the review beyond just the opportunity to ask for a raise:

Be optimistic but realistic. You did everything you possibly could to help your employer during the downturn. And now that the economy is showing some signs of improvement, you’re hoping that all the hard work, the long hours, and the do-whatever-it-takes attitude will finally pay off. And it might. However, unfortunately, the substantial raise you feel you deserve may not be possible at the moment. Therefore, don’t go into the meeting focused solely on your compensation.